Comptroller Franchot: “The Nation’s Economy is Literally Stagnant Right Now, and so is That of the State of Maryland”

From the Office of the Maryland Comptroller:

At [the July 2] Board of Public Works meeting, the panel approved a reduction of nearly $80 million for the fiscal year 2015 budget. Comptroller Peter Franchot, a member of the Board, released the following statement.

“While it’s true that nobody wants to be in a position of cutting department budgets in a fiscal year that is less than 48 hours old, I believe that Secretary Foster is being pragmatic in getting out in front of the situation, rather than simply hoping that things will get better and, then, being forced to take even more difficult actions if and when they don’t.

I do think it’s time we take all of the political spin about Maryland’s fiscal and economic environment, and pack it away right alongside the campaign signs and those mail pieces from last week’s primaries.

Here are the facts, backed up by hard numbers–the nation’s economy is literally stagnant right now, and so is that of the State of Maryland.

In the first quarter of 2014, the United States experienced a 2.9 percent contraction in economic activity, which was the worst quarterly performance since the first quarter of 2009, when we were in the absolute teeth of the Great Recession.

While we always like to think that Maryland is somehow immune from national economic trends, the fact is that during that same time, our state’s average wages grew by only 4/10 of a percentage point – 0.4. This, at a time when gas prices are soaring to their highest levels in six years, and food prices are surging due to a variety of factors.

In other words, everything that we hoped would be up is either flat or going down and everything that should be flat or down is going up. The arrows are just pointing in the wrong direction. When that happens, families don’t spend, small businesses don’t achieve profits, and our consumer-powered economy suffers deeply.

We’re seeing the effects in the revenue numbers. Sales and use tax receipts, year to date, are up just 1.1 percent, which is below the rate of inflation and well below the five percent growth that we would normally see in a normal pattern of economic recovery. Year-to-date withholding receipts are coming in just 2.1 percent over last year – and again, for context, that number should really be at or around 5.5 percent in an economy that is truly recovering.

I would really urge my friends in this business – from both parties – to cut out the political rhetoric. To those who would benefit from a rosier outlook on the national and state economy, stop pretending that we’ve made it through the thicket, because we just haven’t. And to those who would benefit from saying that the sky is falling in Maryland, and blaming it all on the other party, cut it out. What we’re dealing with is a statewide reflection of a national problem.

Having been out there quite a bit myself, I would suggest that folks don’t want to hear the spin anymore, and they aren’t falling for it.

What they do want to hear, honestly, is a sensible approach to the issue in front of us. They want a sense of reassurance that we get it–that we’re going to do exactly what they’ve had to do, which is tighten our belts and cut out those things that we don’t need so that we can actually afford those priorities that we do need and that we do cherish including better schools, more police officers on the street and nutritious meals for children who would otherwise go to bed or go to school hungry.

They want to know that we’re going to hold the line on public policies that, however well-intentioned, will actually take even more money out of the pockets of consumers that are already struggling to put gas in the car and food on the table.

They want to know that we have a game plan to build an economy on the strength and innovation of the private sector, and not simply wait for government spending to lift us out of the doldrums. They want to know that we recognize that money will always go where it’s wanted, and that we’re prepared to take those steps that are necessary to make Maryland a more desirable place to invest hard-earned capital.

So I support the actions that are being taken today as a sensible first step, with the note of caution that even more challenges – and a lot of hard work – lies ahead of us.”